(a) DPDP purchases commence only if approved by the FSA Administrator under the provisions of this subpart. The FSA Administrator will approve DPDP purchases only if the actual dairy production margin has been $4 or less per cwt for each of the preceding 2 months. The actual dairy production margin will be calculated as specified in §1430.110. The following chart shows an example of the timing for the determination of DPDP purchases.
DPDP Purchase Determination Example Based on Dairy Production Margins and 3-Month Maximum for Purchases1
| 2 Consecutive months | Calculate margin for 2 consecutive months2 | If both margins below $4 per cwt in the 2 consecutive months | 3-Month maximum consideration | If either margin above $4 per cwt in the 2 consecutive months |
|---|---|---|---|---|
| January and February | March | Dairy product purchases3 begin in April | 1st month of purchases | No purchases. |
| February and March | April | Dairy product purchases3 begin in May | 2nd consecutive month of purchases | No purchases. |
| March and April | May | Dairy product purchases3 begin in June | 3rd consecutive month of purchases | No purchases. |
| April and May | June4 | No purchases; terminated after 3 consecutive months | 3-month maximum reached (1st month off) | No purchases. |
| May and June | July | No purchases; terminated after 3 consecutive months | 3-month maximum reached (2nd month off) | No purchases. |
| June and July | August | No purchases; terminated after 3 consecutive months | 3-month maximum reached (3rd month off) | No purchases. |
| July and August | September | Dairy product purchases3 begin in October | 1st month of purchases | No purchases. |
| August and September | October | Dairy product purchases3 begin in November | 2nd consecutive month of purchases | No purchases. |
| September and October | November | Dairy product purchases3 begin in December | 3rd consecutive month of purchases | No purchases. |
| October and November | December | No purchases; terminated after 3 consecutive months | 3-month maximum reached (1st month off) | No purchases. |
| November and December | January | No purchases; terminated after 3 consecutive months | 3-month maximum reached (1st month off) | No purchases |
1This example assumes that purchases begin in January. In reality, DPDP can—depending on prices and margin triggers—begin on September 1, 2014, which is the start of MPP-Dairy.
2The full month data for a given month is available at the end of the following month. For example, January data are not available until the end of February.
2Purchases cannot begin unless domestic cheddar cheese or nonfat dry milk prices are at certain differentials relative to world prices.
3In the example, June is the 3rd month of consevutive purchases. June would not be calculated as a potential trigger month, but it is shown on the chart to clearly show the concept of 3 months on and 3 months off for purchases. If purchases are taking place during a month, that month cannot be used as a trigger month for a future purchase period.
(b) DPDP purchases terminate and are not reinstated until the condition specified in paragraph (a) of this section is again met, whenever any one of the following occurs:
(1) If purchases were made for the preceding 3 months, even if the actual dairy production margin remains $4 or less per cwt of milk.
(2) If the actual dairy production margin has been greater than $4 per cwt of milk for the immediately preceding month.
(3) If the actual dairy production margin has been $4 or less, but more than $3, per cwt for the immediately preceding month and during the same month —
(i) The price in the United States for cheddar cheese was more than 5 percent above the world price, or
(ii) The price in the United States for non-fat dry milk (NDM) was more than 5 percent above the world price of skim milk powder.
(4) If the actual dairy production margin has been $3 or less per cwt of milk for the immediately preceding month and during the same month —
(i) The price in the United States for cheddar cheese was more than 7 percent above the world price; or
(ii) The price in the United States for NDM was more than 7 percent above the world price of skim milk powder.
(c) Purchases will terminate beginning with the first day of any month that does not qualify for DPDP purchases.
(d) For calculations under paragraphs (b)(3) and (4) of this section, the FSA Administrator may use data from a single or multiple locales or markets, including weighted averages, in consultation with AMS or other USDA agencies.
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